It seems as though every year there is another news story about the most recent batch of college grads having the highest level of student debt yet. While the same holds true this year, U.S. Rep. Kathy Castor, D-Tampa, is pushing for legislation that would allow students to refinance their student loans.
Castor stressed at a news conference Monday that student loan debt is putting the American Dream on hold for many young people.
“A citizen can refinance their car loan, boat loan and their credit card debt. But, students are not allowed to refinance their student loans,” Castor said at the Greater Realtors Association in Tampa. “That would put a lot of money back into their pockets…They would be able to get on their feet and start their careers in a more secure way.”
The National Association of Realtors and American Student Assistance released a report earlier this year on how student loans are crippling college graduates’ ability to make significant life decisions, like purchasing a house.
“When they try to qualify for a mortgage, that debt is thrown into the mix with any other debt that they would have. It would impact the amount of loan that they would be able to get,” said Jack Rodriguez, a Tampa realtor. “With the ability to refinance into a lower interest rate or stretch it out, they would bring down their payment which would allow them to purchase more house.”
Seven out of every 10 college graduates in the U.S. end up owing $35,000 in student debt, according to the report. While the average debt college graduates in Florida owe is below the national average, it is still a whopping $25,000.
The report also showed that 71 percent of students believe that their student debt has prevented them from buying a home.
Sixty percent of USF student graduates owe $22,600 in debt on average, while 60 percent of University of Tampa students owe an average of $34,000, according to Castor.
Student government leaders from the Tampa Bay’s universities spoke Monday about their concerns about the student debt they’ll face after they graduate.
“The reality is that [students graduating] with all of these loans can't not only find a job, but they can't live the life that they really wanted to,” said Chris Griffin, USF student body president. “College is so expensive that the day-to-day needs are becoming the only thing they can focus on. We have food banks appearing on campus because students can't afford to pay for their own food. You see a trend in student homelessness because they can't afford to pay for rent in an apartment.”
That's not exactly a recipe for success, the students said.
“How can we be successful, how can we reach our potential, if we're living with fear and living with the insecurity of this debt?” said Alec Waid, University of South Florida student body vice president. “Once we graduate, we don't know what's going to happen. That's terrifying for a young person.”
The bill Castor is pushing in Congress is called the “Bank on Students Emergency Loan Refinancing Act,” which was first introduced in the Senate by Massachusetts Senator Elizabeth Warren in 2014. Although the bill has more than 170 co-sponsors, the Republican-led House of Representatives has repeatedly shut it down over the past few years.
The Bank on Students bill would allow student graduates to refinance a private student loan, if it was issued prior to July 1, 2015.
Castor declined to speculate on why Republicans have opposed the bill. But opposition to the bill has been ongoing since 2014, when Republicans in Congress argued that Warren’s bill would raise taxes on wealthy to pay for refinanced student loans.
The local student government leaders emphasized the importance of having the Banks on Students bill passed.
“If we really want to make a change and if we really want to protect our nation's youth and generations to come, we need to focus on our assets, college affordability and how we're going to fix this,” said James Scudero, the student government president at the University of Tampa.
This article appears in Aug 18-25, 2016.